Actuaries As Architects

In time, that framework may evolve to help give consumers more flexibility in product choices, Lautzenheiser says.

The framework should be such that consumers can buy exactly what they need to buy, Lautzenheiser adds.

Lautzenheiser insists that there is no reason why insurers cannot develop products that offer multiple benefits. She suggests that actuaries and regulators can increase flexibility by taking a principle-based approach to determining solvency and financial strength rather than a strictly formulaic approach.

The actuarial academy looked at a principle-based approach for several years, while it was working on a unified valuation system for regulators at the National Association of Insurance Commissioners, Kansas City, Mo. That approach relied more on “earning warning systems” and talks with management than on use of solvency formulas.